UPDATE 2-BTG Pactual misses profit view, in sign asset sales biting

SAO PAULO Aug 9 (Reuters) - Grupo BTG Pactual SA
on Tuesday missed second-quarter profit estimates
for the first time in almost two years, as downsizing efforts by
Latin America's largest independent investment bank curbed
trading and money management income.

Net income totaled about 940 million reais ($299 million) in
the second quarter, below an analysts' consensus estimate of 1.1
billion reais. Profit dropped 12 percent from the prior three
months, falling below the 1 billion-real threshold for net
income for the first time in five quarters.

Income from wealth management activities sank as São
Paulo-based BTG Pactual sold control of Swiss subsidiary BSI SA
and trading suffered with the spin-off of a commodities platform
to ease capital needs. The downsizing also drove expenses down,
yet at half the pace of revenue, which also suffered from weak
asset management activity.

Return on equity (ROE) slumped to 16.1 percent in the
quarter, the lowest in three years and below a 18.1 percent
estimate.

Founder André Esteves, who steered the bank through an
aggressive global expansion until his arrest in November in a
corruption probe, had set a long-term goal for ROE of 20
percent. Esteves has denied allegations of his involvement.

The results suggest that BTG Pactual's decision to shed
assets and dismantle risky but very profitable trading positions
in the wake of Esteves' arrest may hamper the bank's ability to
generate a more stable stream of revenue in coming quarters.

Esteves' arrest forced his partners to dispose of assets in
the wake of massive client fund withdrawals. He returned to BTG
Pactual in a senior advisory role in April, after a Brazilian
judge freed him from months of house arrest.
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